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3 Video Game Stocks to Watch This Earnings Season

Chris Lau, Kapitall: Earnings season is heating up for video game stocks. Here’s what to watch for this week.

When
Electronic Arts (EA) reports quarterly results tomorrow, investors could expect good numbers. The company had three game titles on NPD’s bestseller
list in December. But then
Take-Two (TTWO), another game company, is currently outperforming EA. Meanwhile
Activision (ATVI) is pulling back so far this year, down around 6%. For the first time in 4 years, Call of Duty
ended its reign atop the annual best-seller charts.

With the mixed stock performance, it’s time to take a look at video game stocks’ prospects for this quarter.

Take-Two won the top spot with its release of
Grand Theft Auto V. The hugely successful game was long-awaited: its predecessor,
GTA IV, was had come out in April, 2008. Take-Two released
GTA V this past September. Since then, Take-Two shares remained mostly range-bound.

Click on the interactive charts to see data over time. Sourced from Zacks Investment Research.

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Battlefield 4 claimed the second spot on NPD’s list for EA. Its franchise sports titles,
Madden NFL 25 and
FIFA 14, also did well. Investors could expect EA to report surprisingly strong game sales.

Activision was not so fortunate.
Calls of Duty sales were comparatively weaker than last year. Although the
Ghosts series was the second best seller overall in 2013, quality issues for EA’s
Battlefield title might help generate steady sales for rivals like Activision.

Strong industry

As
gameindustryreported, sales for game hardware rose. This bodes well for this industry in 2014, with total sales in December up 2%. Hardware made up 28% of that growth, adding up to $1.37 billion. And while growth in sales of accessories amounted to $631 million, software sales dropped by $1.28 billion or 17%.

EA could make another run higher after reporting quarterly results soon. Investors not holding a position in this sector may want to study EA’s results closely in comparison to Take-Two and Activision before making any decisions.